Britain is facing the most severe energy shock since the early 1970s, but have no fear: the government has a plan. Details of said plan are still a little sketchy, but will be unveiled in the fullness of time. No need to panic. Keep calm and carry on.

It remains to be seen whether the UK is better prepared to cope with the fallout from Donald Trump’s war with Iran than it was with the pandemic six years ago. To be honest, that wouldn’t be difficult. Yet it is not exactly comforting that ministers are sending out a “we have your back” message to the public while at the same time seeking to reassure the financial markets that any help will be limited and targeted.

To be fair, contingency planning is not easy when you are dealing with someone as unpredictable as Trump. But given Britain’s heavy dependence on imported energy and food, this line will only hold for so long.

The economy was already in poor shape when the war started just over a month ago. Unemployment had been steadily rising during 2025 and growth came to a virtual standstill in the final quarter of the year. Now it is being hit by a colossal supply shock as exports of oil, gas and fertiliser from the Middle East have dried up.

This time last year there were fears of global recession after Trump announced “liberation day” tariff increases on goods imported into the United States. In the end, the global trade war was merely a dry run for the real thing – a proper war in a part of the world that happens to be not only volatile, but crucial for the global economy to boot.

These days I write only fortnightly but much has happened in the past two weeks – none of it good for the global economy. Asia is the continent most dependent on energy exported from the Gulf and it is there that the impact of the war has been keenest. The Philippines has imposed a state of emergency; Sri Lanka has introduced a four-day week; South Korea has announced budget measures to help households cope with spiralling energy bills.

But as the International Monetary Fund warned this week, all roads lead to higher prices and slower growth everywhere. Shortages send prices soaring and because the basics – fuel and food – become dearer, people have less to spend on other things. Businesses look to offset higher costs by shedding staff. Demand slumps and countries slide into recession. In Britain, already expected to be one of the worst performing major economies in 2026, that wouldn’t take much. This year’s crop of graduates is going to find job hunting really hard.

Trump’s announcement that the war could end within two or three weeks even without a deal between Washington and Tehran had an air of desperation about it. Even if there were to be an immediate end to the war there would still be considerable collateral damage to all parts of the global economy, including the US. So, faced with a classic stagflation scenario that would hurt the Republicans in this year’s midterm elections, Trump has blinked. At least, that’s the way it looks.

Here in the UK, the government hopes a swift end to the war will limit the damage to the economy and avoid the need for tough choices. There is a short-term spike in inflation but once it becomes clear there are no permanent effects the Bank of England can resume cutting interest rates. Rachel Reeves will scrap plans for this autumn’s increase in fuel duty and help the poorest households with their energy bills. Job done. The chances are it won’t be as simple as that.

Currently the Treasury won’t act big – or even talk big – for fear the bond markets will turn nasty and demand a higher price for financing the government’s borrowing. Yet this is shaping up to be the third economic crisis of the past two decades, and the experience of the banking collapse of 2008 and the pandemic in 2020 is that countries can act without fear of a bond market backlash when they are faced with economic disaster. The policy tools used then – cutting interest rates aggressively, borrowing more, printing money – should form part of any serious contingency planning.

The Bank of England, which is warning of a “substantial negative supply shock” to the global economy, should be softening up the markets for interest rate cuts. These are going to happen eventually anyway, and the sooner the better. Reeves could ease the blow to the labour market by reversing the job-destroying increases in employers’ national insurance contributions in her first budget. Extra cash to subsidise public transport coupled with a reduction in speed limits would help conserve energy.

Britain also needs to work harder on its economic resilience. The war – just like the pandemic and Russia’s invasion of Ukraine – has highlighted the fragility of global supply chains and the need for greater self-reliance.

Going big on renewable sources of energy is obviously part of that story. Reducing the UK’s exposure to global fossil fuel prices makes sense. But there is much more to be done. Britain imports about 40% of its food and last ran a trade surplus in manufactured goods in 1982. With the world as it is, every country requires a plan for economic self-sufficiency. That need is particularly acute here.

• Larry Elliott is a Guardian columnist